Commodity Promotion Programs in the United States - Cornell University

National Institute for Commodity Promotion Research & Evaluation

May 1999 NICPRE 99-01 RB 99-03

Commodity Promotion Programs in the United States

by Philip R. Vande Kamp and Harry M. Kaiser

Department of Agricultural, Resource, and Managerial Economics College of Agriculture and Life Sciences Cornell University, Ithaca, New York 14853

Abstract An analysis of 102 survey responses from generic commodity promotion organizations was completed. Details regarding objectives, export promotion, funding sources, program evaluation, and the allocation of expenditures for promotion organizations were evaluated. We estimate that the organizations included in this analysis control 70 to 80 percent of the total generic commodity promotion expenditures in the U.S. Since generic commodity promotion organizations play a significant roll in promoting and marketing many commodities, analyses of these organizations should continue to provide potential benchmarking and summarizing information so that they can operate efficiently and effectively.

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List of Tables Table 1 Table 2 Table 3 Table 4a Table 4b Table 5a Table 5b Table 6a Table 6b Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13a Table 13b Table 13c Table 13d Table 13e Table 14a Table 14b Table 14c Table 14d Table 14e Table 15 Table 16 Table 17 Table 18a Table 18b

Commodity Category Classifications Number of Respondents by Commodity Category and Budget Size Survey Respondents, Number of Staff, and Aggregate Budgets Determination of Objectives by Commodity Category Determination of Objectives by Budget Size Types of Information Used in Determining Objectives by Commodity Category Types of Information Used in Determining Objectives by Budget Size Organization Objectives by Commodity Group Organization Objectives by Budget Size Number of Organizations by Method of Funding and Commodity Category Organizations that Promote in Export Markets Importance of Export Promotion Proportion of Export Promotion Investment from Market Promotion Program (MPP) Proportion of Export Promotion Investment from Public Sources Other than MPP Impact of the Elimination of MPP or State Funds on Export Promotion Methods Used to Evaluate the Objective of Increasing Aggregate Commodity Sales in Export Activities Methods Used to Evaluate the Objective of Maximizing Producer Prices and Returns in Export Activities Methods Used to Evaluate the Objective of Reducing Surplus Commodity Stocks in Export Activities Methods Used to Evaluate the Objective of Changing Consumer Beliefs in Export Activities Methods Used to Evaluate the Objective of Changing Retailer Attitudes in Export Activities Methods Used to Evaluate the Objective of Increasing Aggregate Commodity Sales in Domestic Activities Methods Used to Evaluate the Objective of Maximizing Producer Prices and Returns in Domestic Activities Methods Used to Evaluate the Objective of Reducing Surplus Commodity Stocks in Domestic Activities Methods Used to Evaluate the Objective of Changing Consumer Beliefs in Domestic Activities Methods Used to evaluate the Objective of Changing Retailer Attitudes in Domestic Activities Use of Internet or World Wide Web Budget Allocation of Promotion Organizations by Commodity Category Budget Allocation of Promotion Organizations by Budget Size Average Percent of Budget Used for Program Evaluation by Commodity Category Average Percent of Budget Used for Program Evaluation by Total Budget

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Commodity Promotion Programs in the United States Generic commodity promotion programs have grown in importance over the past several decades and have matured from primarily state level programs before the mid-1980’s to a mixture of state and national programs (Forker and Ward). Currently a significant number of both federally legislated as well as state and regional commodity promotion programs rare in effect. Generic commodity promotion describes activities when a standard industry-wide commodity, such as cotton or beef, is promoted as opposed to particular brands or the production of specific producers. Farmers, cooperatives, and processors organize generic commodity promotion programs in order to provide information and promote their commodity. To assure orderly operation of generic promotion programs, however, a legislative mandate is needed for the promotion organization to collect equitable levies from those who benefit from the promotion activities. Although the Agricultural Marketing Agreement Act of 1937 set the federal legislative foundation for generic promotion programs, only several national programs were organized under this legislation. In recent years, the growth in commodity promotion activities has come from stand-alone legislation, which has the advantage of conforming to a specific commodity or organization’s needs (Forker and Ward 82). Most generic commodity promotion legislation is similar where referendums of producers, processors, and/or cooperatives are used to determine support for check-off funded promotion programs. New generic commodity promotion programs are frequently being introduced, while some current programs fail to pass referendums and are subsequently discontinued. For example, in the Federal Agricultural Improvement and Reform Act of 1996, three additional commodity promotion programs were authorized including popcorn, canola and rapeseed, and kiwifruit (Wright). Other programs have recently been discontinued including the Fresh Cut Flowers and Fresh Cut Greens Promotion and Information Order, also known as PromoFlor. As a result of failure to pass a referendum, this program was ordered to discontinue in 1997 (Agricultural Marketing Service, U.S. Department of Agriculture). Over the years, the increased use of commodity promotion programs has given rise to a specific area of economic research that concentrates on investigating and evaluating generic commodity promotion programs. As a result, the base of literature relating to generic commodity promotion is extensive and continues to rapidly grow. An excellent source of details on the history and economics of generic commodity promotion programs is Forker and Ward. Ferrero et al. provide an extensive review of commodity promotion research. Also a previous survey of U.S. Commodity promotion organizations which was performed in 1990, is summarized in Lenz, Forker, and Hurst. Survey In this study, U.S. generic commodity promotion organizations were surveyed to obtain information regarding their objectives, funding sources, export promotion priorities, program evaluation procedures, and allocation or promotion expenditures. Of the 220 surveys mailed in the summer of 1995, 67 were sent to state departments of agriculture, 51 were sent to state,

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regional, and national dairy promotion organizations, and 102 were sent to other generic promotion organizations. Surveys were sent to state departments of agriculture to obtain information on any state generic promotion programs that were administered by personnel at the state departments of agriculture. Since many state departments of agriculture are not involved in any promotion programs, many of these surveys were either not returned or returned without any useful information. Some state departments of agriculture, however, have oversight of promotion organizations, and in these cases, a completed survey was returned. For the dairy and other generic promotion organizations, some programs had been discontinued and were no longer in existence. Of the surveys sent, 102 useful surveys were returned. We estimate that the organizations that returned useful surveys control 70 to 80 percent of the total generic commodity promotion expenditures in the U.S. The actual survey, which was used in this study, is provided in the appendix. The survey responses were divided into seven categories based on the commodities that they represented and promoted (Table 1). A majority of the respondents promote one or possibly two commodities that fall clearly into one of the commodity categories. Several responses from state departments of agriculture, however, described promotion programs for a group of local or state commodities. In these programs, states frequently are attempting to differentiate their products from those in other states. This group of responses was classified under State and RegionSpecific Products. Also the survey responses were segmented into categories based on their total budgets. These categories range from less than one-half million dollars to greater than twenty-five million dollars. Table 2 shows the number of responses by commodity category and by total budget. Some commodity categories including vegetables, fruits and nuts, fibers and other products, and state and region-specific products are heavily weighted toward smaller organizations in terms of total budget, whereas the other categories show more of a balance of small and large organizations. The number of staff and the aggregate budget for each commodity category is provided in Table 3. This table shows that the expenditures for dairy promotion organizations are significantly larger than the aggregate budgets for any of the other six categories. On the other extreme, the aggregate budget for the category of state and regions-specific products is very small relative to the other categories. Objectives of Promotion Organizations The survey of promotion organizations attempted to elicit who determines the objectives in each organization and what information is used in this process. The balance of responsibility for setting objectives differs across promotion organizations. Table 4a displays how objectives are set across commodity categories. In most organizations, the objectives are set either by the producer board or by the staff in consultation with the producer board. These two answers make up 76 percent of all surveyed organizations. The “other” response frequently included board of directors or board of trustees and not a producer board of directors since some organizations promote processed or high-value commodities. The state and region-specific product

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organizations are somewhat atypical since the organization’s staff or legislature frequently sets objectives in this category. Table 4b, which presents the determination of objectives across budget sizes, shows that in higher budget organizations, objectives are more likely to be set by either the producer board or the staff in consultation with the producer board. Tables 5a and 5b show the types of information that are used in determining objectives by commodity category and budget size respectively. For all organizations, economic information about the commodity sector is the most commonly used information in setting objectives. From Table 5a, some promotion organizations such as vegetables, dairy, and meat, poultry, seafood, and eggs are more likely to use consumer surveys in determining objectives than other commodity categories. Grains and oilseeds, and fibers and other products are less likely to use consumer surveys. Table 5b shows that use of the various types of information is in general larger for organizations with larger budgets. Specifically, the use of consumer surveys and economic analysis is greater for organizations with larger budgets; however, no clear correlation occurs between budget size and when objectives are set externally. Other information used in determining objectives included overseas staff, specific data, and consultants. The two main objectives reported by promotion organizations included “increase total commodity sales” and “increase producer prices and net returns” (Table 6a). The objective, “change consumer beliefs about the commodity” is ranked high for dairy and meat, poultry, seafood and eggs commodity promotion organizations, which is likely related to consumer concerns about fat and cholesterol associated with these commodities groups. The objective, “reduce surplus stocks of the commodity,” is highly ranked by only a few organizations. Other objectives included changing overseas consumer beliefs and practices, and providing information to food service operators. No correlation between organizations’ budget levels and highly ranked objectives was apparent (Table 7b). Funding of Promotion Programs A variety of methods are used to fund commodity promotion programs. Many traditional promotion programs are funded by a levy or checkoff applied to farmers or first-handlers of a commodity. In programs supported by processors, processors may be required to pay a levy based on the quantity or value of the product that is processed. Some programs are state mandated while others are federally mandated. The levy can take the form of a per unit levy or a levy on the value of the commodity. For example, producer-supported fluid milk and dairy product promotion programs are funded by a levy of $0.15 per hundred pounds of raw milk marketed, while producer-supported pork promotion programs are funded by a levy of 0.45 percent of market value when hogs or pigs are sold. Methods of funding promotion programs also include voluntary contributions and membership fees. While most state-authorized programs do not allow refunds, federally authorized programs were required until 1983 to allow producers to obtain a refund of their assessment. In 1983, however, Congress passed a precedent-setting generic dairy promotion program, which did not allow refunds (Forker and Ward). In the following years, many federal generic commodity promotion programs followed this example. Very recently, however, the constitutionality of mandatory assessments for generic commodity promotion programs was tested in the case Glickman v.

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Wileman Bros. and Elliott, Inc. In June of 1997, the U.S. Supreme Court upheld the constitutionality of mandatory assessments. In our survey, the most common method of funding was state-mandated producer checkoffs followed closely by federally mandated producer checkoffs (Table 7). It is interesting to note that the dairy, and meat, poultry, seafood, and eggs commodity categories show more organizations obtaining funding via federally mandated checkoffs relative to state mandated checkoffs. The reverse is true for grains and oilseeds, and fruits and nuts where the number of organizations funded by state-mandated checkoffs is larger than the number of organizations funded by federally mandated checkoffs. With the exception of state and region-specific products, all commodity categories contain organizations that are supported by voluntary contributions. Other methods of funding included excise taxes and license fees. Export Promotion In many of the U.S. generic commodity promotion organizations, export promotion is a significant and growing area of importance. Table 8 shows that 54 percent of the organizations in the survey promote in export markets. With the exception of the dairy category, a significant percentage of the organizations in all of the commodity categories promoted in export markets. Only 7 percent of the organizations in the dairy category participated in export promotion. Also from Table 8, one can observe that firms with larger total budgets appear more likely to participate in export promotion. Not only do a large proportion of the organizations promote in export markets, but also 73 percent consider export promotion to be “very important” to their organization’s goals (Table 9). Also 65 percent expect the importance of export promotion to increase while 33 percent expect it to remain the same. While domestic promotion programs are almost entirely funded by producers, processors, and cooperatives, export promotion programs are often partially funded by public sources. States frequently provide financial support for export promotion, and federal programs such as the Market Promotion Program (MPP) and the Foreign Market Development Program (FMD) provide significant funding to generic commodity promotion organizations for the purpose of export promotion. For organizations in our survey that promote in export markets, an average of 41 percent of export promotion expenditures was funded by the MPP (Table 10). Utilization of the MPP was highest for the vegetables and dairy categories – all organizations in these categories that promoted exports used MPP funds. Organizations in other categories such as grains and oilseeds, fibers and other products, and state and region-specific products were less likely to use MPP funds. No clear correlation is apparent between the percentage of organizations that utilized MPP and the total budgets of the promotion organizations. Of the organizations in the total budget categories that utilized MPP funds (given by the percentage with nonzero responses), the average percentage of export promotion funded by MPP ranges from 45 to 63 percent (average percent/percent with nonzero responses), which is a significant percentage. The proportion of export promotion expenditures provided by non-MPP sources is shown in Table 11. For all organizations that participated in export promotion, 39 percent obtained funds

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from non-MPP sources. On average, 15 percent of export promotion was funded by non-MPP sources including state sources and funds from the Foreign Market Development program (FMD). Not surprisingly, all organizations in the state and region-specific products category obtained funds from non-MPP sources, most of which are likely state funds. Furthermore, an average of 70 percent of export promotion in this category is supported by non-MPP funds. Table 12 shows that the elimination of the MPP or state funds would have a significant impact on export promotion in some organizations. Overall, 25 percent would stop engaging in export promotion, but 35 percent would invest the same amount of organizational funds if these funding sources were eliminated. From the responses by total budget in Table 12, promotion organizations with small budgets would be more likely to abandon export promotion than organizations with larger budgets if MPP or state export promotion funds were eliminated. The specific meaning of “organizational funds” – whether it includes MPP or state funds – was somewhat ambiguous in the survey; therefore the responses to changes in the “investment of organizational funds” should be interpreted cautiously. Methods Used to Evaluate Objectives Tables 13a through 13e present the methods used by organizations to evaluate their objectives in terms of export activities. These responses are from organizations that, of course are involved in export promotion, but also provided a ranking of the specific objective for which evaluation methods are selected. The right-hand column in each table shows the number of organizations that ranked this objective. For example, in Table 13a, 50 organizations ranked “increasing aggregate commodity sales” as an objective and 32 percent of these organizations stated that consumer surveys were used to evaluate this objective. Similarly, 54 percent stated that economic analysis was used to evaluate this objective. No indication is provided here of what number this objective was ranked, but the number of organizations that ranked this method and whether a method or no method was used to evaluate this objective can give an indication of importance of the objective. No correlations were found between commodity categories and methods used to evaluate objectives; therefore results by commodity category are not presented. Increasing aggregate commodity sales was a highly ranked objective; therefore a large majority of the organizations evaluated this objective using a variety of methods (Table 13a). The most common methods for evaluating this objective included change in sales and economic analysis. The most common methods for evaluating the objective of maximizing producer prices and returns included change in farm price and economic analysis (Table 13b). The choice of methods used to evaluate the objectives of reducing surplus commodity stocks, changing consumer beliefs, and changing retailer attitudes in export activities are shown in Table 13c, Table 13d and Table 13e respectively. It is interesting to note that the objective of reducing surplus commodity stocks was ranked by only 36 organizations out of 55 that promote in export markets. Also, 28 percent of organizations that ranked this objective did not provide and evaluation method, which suggests that this is a low ranking objective. Not surprisingly, the most common method used to evaluate changing consumer beliefs is consumer surveys (Table 13d). In these results, no clear correlation emerges between organizations’ total budget levels and methods used to evaluate objectives.

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Similar to the above tables that applied to export activities, Tables 14a through 14e present the choice of evaluation methods for objectives in domestic activities. The most frequently ranked objective was increasing aggregate commodity sales where 92 organizations included this objective in their ranking. Similar to above, change in sales was the most commonly used method for evaluating this objective. In Table 14a, the use of consumer surveys, economic analysis, and change in sales tend to be higher for organizations with larger budgets. This result, however, is not as apparent for these methods when they are used in evaluating other objectives. The remaining results obtained for domestic activities are similar to those results obtained for export activities. Use of Internet or World Wide Web The use of the Internet or World Wide Web by commodity category and total budget is shown in Table 15. Use of the Internet or World Wide Web is highest among organizations in the category of meant, poultry, seafood, and eggs, and lowest among organizations in the fruits and nuts category. The size of organizations is likely a factor in this result. The fruits and nuts category contains a high number of relatively small organizations while the organizations in the category of meat, poultry, seafood and eggs are relatively large. This result is even better illustrated in the lower part of Table 13 where use of the Internet or World Wide Web is presented by total budget. These results show that in general, small organizations are less likely to use the Internet or World Wide Web than larger ones. Allocation of Promotion Expenditures The budget allocations of promotion organizations are shown by commodity category and total budget in Table 16 and Table 17 respectively. Table 17 also provides a breakdown of expenditures for all organizations in this study. These tables provide a useful overview of the allocation of generic commodity promotion organizations’ expenditures and as a result, are probably one of the most interesting results of this study. Some organizations encountered difficulty in allocating their budgets across the alternatives in the survey and as a result, a complete allocation of each organization’s budget was not provided in all cases. In the tables, several additional rows were added to account for unallocated promotion expenditures. A couple of organizations were not able to separate expenditures on television advertising and radio advertising; therefore, a row was added to include television and radio advertising not separated. Rows entitled unallocated domestic promotion and unallocated export promotion were included for organizations that provided total domestic and total export promotion expenditures but were not able to itemize these expenditures. Also a row was included for unallocated expenditures since several organizations did not itemize any expenditures and provided only their total budgets. Some funds are transferred between promotion organizations, especially in the case of collaboration between state and national programs. As a result, aggregate budgets in the commodity categories would be overstated by simply summing the total budgets of each of the promotion organizations in a category. To avoid double counting, the funds transferred to other promotion organizations included in our survey responses were subtracted from the sum of total

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budgets in each category. Although the survey did not ask to which organizations the contributions were provided, fortunately most organizations that contributed to other promotion organizations voluntarily provided this information in the comments sections of the survey. Ignoring this potential double counting would have overstated the aggregate budget for all promotion organizations in the survey by approximately 0.8 percent. From Table 16, one can observe that the vegetables, dairy, and meat, poultry, seafood, and eggs (MPSE) categories had proportionally high domestic promotion expenditures while grains and oilseeds, and fibers and other products had proportionally high export promotion expenditures. The categories which emphasized domestic promotion, including vegetables, dairy, and MPSE, spent 25.3, 37.6 and 25.7 percent respectively of their total annual expenditures on television. Organizations in the fruits and nuts category, while spending a moderate percentage of total expenditures on television advertising, heavily utilized in-store promotions in domestic promotion activities. Promotion organizations in fibers and other categories expended by far the largest percentage of total budget on export promotion. In this case, most of the export promotion expenditures were spent on consumer advertising. One can observe that the dairy and MPSE categories spent a large percentage of their total budgets on nutrition education relative to other commodity categories. Consumer concerns about fat and cholesterol in these commodity categories are likely the stimulus behind nutrition education programs. This result corresponds to the earlier result where the objective of “changing consumer beliefs about the commodity” was highly ranked by organizations in both of these categories. The differing methods of promotion across the budget categories are clearly evident in Table 17. One can see that television advertising is larger as a percentage of total expenditures for organizations with larger budgets. Smaller organizations utilize alternative promotion methods such as nutrition education and public relations. Expenditures as a percentage of total budget for nutrition education and public relations is higher for small organizations compared to large organizations. In general, program administration is also higher as a percentage of total budget for small organizations compared to large organizations. Overall, 50.6 percent of all included organizations’ budgets is spent on domestic promotion, and 23.6 percent is spent on television advertising, which is the largest of all the itemized categories. Export promotion consumes 14.9 percent of the total budget, and 7.1 percent is expended on program administration. Many additional details on the budget allocations for promotion organizations can be found in Table 16 and Table 17. Evaluation of Promotion Programs Evaluation of promotion activities is an important function in generic commodity promotion organizations. To maintain the confidence of levy-paying producers, processors, or cooperatives, promotion organizations need to demonstrate that their promotion activities are effective and worthwhile. Also, when export promotion activities are supported by public funds, promotion organizations must show that these funds are used in an effective manner. Recently, evaluation activities of promotion organizations were mandated in the Federal Agricultural

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Improvement and Reform Act of 1996, which requires an independent evaluation of the effectiveness of each generic commodity promotion program, not less than every five years (Wright). The average percentage of budget used for program evaluation by commodity category and by total budget is given in Table 18a and Table 18b respectively. From Table 18a, promotion organizations in the dairy, and fibers and other products categories were most likely to allocate expenditures to program evaluation. These two categories also reported the highest average percentage of total budget applied to program evaluation. No organizations in the state and region-specific commodity category allocated expenditures to program evaluation. Table 18b shows that organizations with small budgets were less likely to allocate funds to program evaluation compared to larger organizations. No clear correlation existed, however, between average percentage of total budget allocated to program evaluation and total budget categories. For all organizations in the survey that provided itemized budgets, 32 percent allocated funds to program evaluation and the average allocation was 1.0 percent of total budget. Summary and Conclusion An analysis of 102 survey responses from generic commodity promotion organizations was completed. Details regarding objectives, export promotion, funding sources, program evaluation, and the allocation of expenditures for promotion organizations were evaluated. We estimate that the organizations included in this analysis control 70 to 80 percent of the total generic commodity promotion expenditures in the U.S. Some of the key results of this analysis include: o

Total budgets for all organizations in the analysis were $695,335,312

o

Of all the commodity categories, the dairy category has by far the largest aggregate budget.

o

Two highest ranked objectives for promotion organizations were “increase total commodity sales” and “increase producer prices and net returns.”

o

The most common funding sources among the organizations in our survey were state and federally mandated producer checkoffs.

o

Large organizations in terms of total budget are more likely to promote in export markets than smaller organizations.

o

For all organizations, 41 percent of all export promotion expenditures was obtained from the Market Promotion Program.

o

For all organizations, 15 percent of all export promotion expenditures was provided by public sources other than MPP.

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o

Organizations with smaller total budgets are less likely to utilize MPP funds than organizations with larger budgets.

o

Sixty percent of the organizations in the survey do not use the Internet or World Wide Web.

o

Vegetables, dairy and meat, poultry, seafood, and egg categories had proportionally high domestic promotion expenditures while grains and oilseeds, and fibers and other products had proportionally high export promotion expenditures.

o

Larger promotion organizations are more likely to utilize television advertising while smaller organizations are more likely to use nutrition education programs and public relations.

o

Program administration expenses are high as a percentage of total budget for small organizations compared to larger organizations.

o

For all organizations, 50.6 percent of total budget was allocated to domestic promotion while 14.9 percent was allocated to export promotion. Television advertising consumed 23.6 percent of the total budget for all organizations. Similarly, program administration expenses were 7.1 percent of the total budget, and program evaluation expenditures were 1.2 percent of the total budget.

Since generic commodity promotion organizations play a significant roll in promoting and marketing many commodities, analyses of these organizations should continue to provide potential benchmarking and summarizing information so that they can operate efficiently and effectively.

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References Agricultural Marketing Service, U.S. Department of Agriculture. “PromoFlor Program Fails in Referendum.” AMS News Release No. AMS-170-97, 1997 Ferrero, Boon, Kaiser and Forker Forker, Olan D. and Ronald W. Ward. Commodity Advertising: The Economics and Measurement of Generic Programs. New York, NY: Lexington Books, 1993. Hurst, S. and Olan D. Forker. “Annotated Bibliography of Generic Commodity Promotion Research.” A.E.Research 89-26. Department of Agricultural Economics, Cornell University, 1989. Lenz, John E., Olan D. Forker, and Susan Hurst. “U.S. Commodity Promotion Organizations: Objectives, Activities, and Evaluation Methods.” A.E.Research 91-4. Department of Agricultural Economics, Cornell University, 1991. Wright, Bruce H. “Title V: Agricultural Promotion” in Provisions of the Federal Agricultural Improvement and Reform Act 1996. AIB 729. Economic Research Service, U.S. Department of Agriculture, September 1996.

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Table 1. Commodity Category Classifications Grains and Oilseeds Barley Corn Soybeans Sorghum Wheat Rice Vegetables Artichokes Avocados Edible Beans Lentils Onions Peas Potatoes Tomatoes Dairy Fluid Milk Manufactured Dairy Products Meat, Poultry, Seafood, and Eggs Animal Genetic Products Beef and Beef Products Eggs Fowl Lamb Pork Seafood Turkey Veal

Fruits and Nuts Almonds Apples Canola Cherries Figs Flax Grapes (fresh and wine) Hazelnuts Kiwifruit Nectarines Nuts Peaches Peanuts Pears Plums Prunes Raisins Safflower Sunflower seed and oil Watermelon Wines Fibers and Other Products Cotton (raw and value added products) Cut Ferns High Value Consumer Goods Honey Hops Mohair Seed and Plant Genetics State and Region-Specific Products Products promoted by state departments of agriculture, which frequently include a broad range of raw and maufactured agricultural products produced in a state.

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Table 2. Number of Respondents by Commodity Category and Budget Size Total Budget (Million Dollars) 1.005.0010.00>=25.0 4.99 9.99 24.99

Commodity Category

= 25.0

0

50

38

0

13

All Budgets

8

26

50

6

10

* Based on 101 responses

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Table 5a. Types of Information Used in Determining Objectives by Commodity Category

Commodity Category

Percent of Respondents that Chose the Following Types of Information * Economic Projected Info. About Consumer Economic Objectives Growth in Other Commodity Analysis Set Commodity Surveys Sector Externally Production

Grains and Oilseeds

78

22

67

22

56

33

Vegetables

80

70

40

20

60

0

Dairy

64

68

50

4

39

14

Meat, Poultry, Seafood, and Eggs

82

73

64

9

55

18

Fruits and Nuts

75

57

39

11

61

14

Fibers and Other Products

57

0

14

14

0

0

State and Region Specific

50

50

50

25

63

25

All Groups

70

55

47

12

50

15


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Table 5b. Types of Information Used in Determining Objectives by Budget Size Percent of Respondents that Chose the Following Types of Information * Economic Projected Info. About Consumer Economic Objectives Growth in Other Total Budget Analysis Set Externally Commodity (Million Dollars) Commodity Surveys Sector Production < 0.5

63

37

19

11

59

19

0.5 - 0.99

67

33

42

17

58

8

1.0 - 4.99

70

61

52

9

33

18

5.0 - 9.99

78

67

56

33

67

0

10.0 - 24.99

83

75

83

8

42

25

>= 25.0

75

88

63

0

63

0

All Budgets

70

55

47

12

50

15


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Table 6a. Organization Objectives by Commodity Category Percent of Organizations that Ranked the Following Objectives 1 or 2 * Commodity Category

Increase Reduce Change Change Increase Total Surplus Consumer Retail Producer Commodity Prices and Stocks of Beliefs about Attitudes about Sales Net Returns Commodity Commodity Commodity

Other

Grains and Oilseeds

100

100

0

0

0

0

Vegetables

70

70

0

50

10

0

Dairy

96

36

4

61

7

4


55

45

0

64

0

36

Fruits and Nuts

79

71

11

21

14

4


71

14

0

29

29

29


88

75

0

13

25

0

All Groups

82

57

4

38

11

8


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Table 6b. Organization Objectives by Budget Size Percent of Organizations that Ranked the Following Objectives 1 or 2 * Increase Total Total Budget (Million Dollars) Commodity Sales

Increase Producer Prices and Net Returns

Reduce Change Change Surplus Consumer Retail Stocks of Beliefs about Attitudes about Commodity Commodity Commodity

Other

< 0.5

85

56

4

44

15

0

0.5 - 0.99

92

50

0

50

8

0

1.0 - 4.99

82

73

3

27

9

6

5.0 - 9.99

89

56

11

33

11

0

10.0 - 24.99

92

33

8

33

8

17

>= 25.0

38

50

0

50

13

50

All Groups

82

57

4

38

11

8


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Table 7. Number of Organizations by Method of Funding and Commodity Category Method of Funding Commodity Category

State Federally Mandated * Mandated *

Processor Voluntary Checkoff Contributions

Other

Total

Grains and Oilseeds

2

5

1

2

0

10

Vegetables

2

3

2

5

0

12

Dairy

21

12

4

3

1

41


8

4

0

2

6

20

Fruits and Nuts

5

15

5

6

5

36


1

2

0

2

3

8


0

1

0

0

7

8

Total

39

42

12

20

22

135 **

** Since some respondents had more than one funding source, the total is greater than the number of respondents. * Producer Checkoffs

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Table 8. Organizations that Promote in Export Markets Grains and Oilseeds

Vegetables

78%

50%

By Commodity Category Meat, Poultry Fruits Dairy Seafood, and and Eggs Nuts (percent of respondents) 7%

67%

71%



86%

88%

>= 25.0

All Respondents

63%

54%

By Total Budget (Million Dollars) < 0.5

0.5- 0.99

1.00 - 4.99

5.00 - 9.99

10.00 - 24.99

(percent of respondents) 41%

42%

64%

56%

21

62%

Table 9. Importance of Export Promotion *

Very Important

73%

How Important is Export Promotoin to Your Organization's Goals? Neither Important nor Somewhat Unimportant Somewhat Important Unimportant Important (percent of respondents) 17%

10%

0%

0%

Relative to Domestic Promotion, Is the Importance of Export Promotoin Likely to: Increase?

Stay the Same?

Decrease?

(percent of respondents) 65%

33%

* Based on 52 responses out of 55 organizations that promote in export markets

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2%

Table 10. Proportion of Export Promotion Investment From the Market Promotion Program (MPP) * By Commodity Category Grains and Oilseeds

Vegetables

Dairy

23%

44%

64%

100%

57%

Meat, Poultry Seafood, and Eggs (aveage percent)

Fruits and Nuts



54%

47%

35%

21%

(percent with nonzero responses) 100% 75% 80%

50%

57%

10.00 - 24.99

>= 25.0

All Respondents

55%

36%

41%

80%

73%


0.5- 0.99

1.00 - 4.99

5.00 - 9.99 (aveage percent)

33%

20%

42%

55%

(percent with nonzero responses) 64%

40%

67%

100%

100%

* Based on all 55 responses of organizations who promoted in export markets

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Table 11. Proportion of Total Export Promotion Investment From Public Sources Other than MPP (e.g. State Funds) * By Commodity Category Grains and Oilseeds

Vegetables

Dairy

32%

5%

5%

40%

50%

Meat, Poultry Seafood, and Eggs (aveage percent)

Fruits and Nuts



4%

5%

9%

70%

(percent with nonzero responses) 50% 29% 15%

67%

100%

10.00 - 24.99

>= 25.0

All Respondents

8%

16%

15%

40%

39%


0.5- 0.99

1.00 - 4.99

5.00 - 9.99 (aveage percent)

17%

13%

19%

0%


50%

42%

0%

43%

* Based on 51 responses out of 55 organizations that promoted in export markets

24

Table 12. Impact of the Elimination of MPP or State Funds on Export Promotion * Percent of Respondents that Chose: Increased Decreased Same Investment of Investment of Investment of Organizational Organizational Organizational Funds Funds Funds

Commodity Category

Stop Engaging in Export Promotion

Grains and Oilseeds

14

71

0

14

Vegetables

0

60

0

40

Dairy

0

0

100

0


20

40

0

40

Fruits and Nuts

26

32

21

21


17

17

33

33


71

14

14

0

< 0.5

50

20

10

20

0.5 - 0.99

0

60

40

0

1.0 - 4.99

35

25

15

25

5.0 - 9.99

0

60

0

40

10.0 - 24.99

14

43

14

29

>= 25.0

0

50

50

0

All Budgets

25

35

18

22

Total Budget (Million Dollars)

* Based on 51 responses out of 55 organizations that promote in export markets

25

Table 13a. Methods Used to Evaluate the Objective of Increasing Aggregate Commodity Sales in Export Activities Percent of Respondents that Chose: Total Budget (Million Dollars)

Consumer Economic Surveys Analysis

Change in Sales

Change in Farm Price

Other

No Method Selected

Number of Organizations

< 0.5

27

45

82

55

0

9

11

0.5 - 0.99

60

80

80

40

0

0

5

1.0 - 4.99

21

47

74

16

5

5

19

5.0 - 9.99

40

20

100

20

0

0

5

10.0 - 24.99

33

67

100

0

0

0

6

>= 25.0

50

100

100

25

0

0

4

All Budgets

32

54

84

26

2

4

50

Table 13b. Methods Used to Evaluate the Objective of Maximizing Producer Prices and Returns in Export Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

18

45

73

64

9

18

11

0.5 - 0.99

25

75

50

75

0

0

4

1.0 - 4.99

20

55

40

50

0

10

20

5.0 - 9.99

40

80

60

80

0

0

5

10.0 - 24.99

0

17

0

17

17

50

6

>= 25.0

20

60

80

40

0

20

5

All Budgets

20

53

49

53

4

16

51

26

Table 13c. Methods Used to Evaluate the Objective of Reducing Surplus Commodity Stocks in Export Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

13

38

88

25

0

13

8

0.5 - 0.99

33

0

0

33

0

33

3

1.0 - 4.99

8

58

50

17

8

17

12

5.0 - 9.99

0

0

50

25

0

50

4

10.0 - 24.99

0

20

40

0

0

60

5

>= 25.0

0

50

75

25

0

25

4

All Budgets

8

36

56

19

3

28

36

Table 13d. Methods Used to Evaluate the Objective of Changing Consumer Beliefs in Export Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

44

33

56

11

11

22

9

0.5 - 0.99

80

40

60

20

0

20

5

1.0 - 4.99

59

24

41

0

0

18

17

5.0 - 9.99

100

0

50

0

0

0

4

10.0 - 24.99

100

0

50

0

0

0

4

>= 25.0

100

20

60

20

0

0

5

All Budgets

70

23

50

7

2

14

44

27

Table 13e. Methods Used to Evaluate the Objective of Changing Retailer Attitudes in Export Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

25

38

75

13

25

13

8

0.5 - 0.99

75

50

75

25

0

25

4

1.0 - 4.99

33

20

40

7

7

20

15

5.0 - 9.99

25

25

75

0

25

25

4

10.0 - 24.99

50

0

50

0

50

0

4

>= 25.0

100

40

60

20

0

0

5

All Budgets

45

28

58

10

15

15

40

28

Table 14a. Methods Used to Evaluate the Objective of Increasing Aggregate Commodity Sales in Domestic Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

31

35

58

38

0

15

26

0.5 - 0.99

58

58

67

33

0

8

12

1.0 - 4.99

47

40

77

33

7

7

30

5.0 - 9.99

63

25

88

25

0

0

8

10.0 - 24.99

67

33

78

0

0

22

9

>= 25.0

57

86

100

14

0

0

7

All Budgets

48

42

73

29

2

10

92

Table 14b. Methods Used to Evaluate the Objective of Maximizing Producer Prices and Returns in Domestic Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

24

32

48

68

4

20

25

0.5 - 0.99

22

67

44

56

0

11

9

1.0 - 4.99

25

46

50

64

0

14

28

5.0 - 9.99

43

57

86

71

0

0

7

10.0 - 24.99

0

43

29

29

14

43

7

>= 25.0

14

86

86

43

14

0

7

All Budgets

23

48

53

60

4

16

83

29

Table 14c. Methods Used to Evaluate the Objective of Reducing Surplus Commodity Stocks in Domestic Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

6

25

50

13

0

38

16

0.5 - 0.99

17

17

17

33

0

50

6

1.0 - 4.99

22

56

67

33

6

11

18

5.0 - 9.99

14

29

57

29

0

43

7

10.0 - 24.99

0

40

40

0

0

40

5

>= 25.0

0

67

83

17

0

0

6

All Budgets

12

40

55

22

2

28

58

Table 14d. Methods Used to Evaluate the Objective of Changing Consumer Beliefs in Domestic Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

62

29

57

10

5

10

21

0.5 - 0.99

91

36

55

9

9

0

11

1.0 - 4.99

76

31

45

7

3

7

29

5.0 - 9.99

100

14

71

0

0

0

7

10.0 - 24.99

88

13

50

0

0

13

8

>= 25.0

100

38

63

13

0

0

8

All Budgets

80

29

54

7

4

6

84

30

Table 14e. Methods Used to Evaluate the Objective of Changing Retailer Attitudes in Domestic Activities Percent of Respondents that Chose: Total Budget (Million Dollars)


Change in Sales


Other

No Method Selected


< 0.5

39

17

72

17

17

11

18

0.5 - 0.99

71

43

57

14

0

14

7

1.0 - 4.99

50

29

58

8

13

8

24

5.0 - 9.99

29

14

43

0

14

29

7

10.0 - 24.99

25

13

38

0

50

25

8

>= 25.0

88

50

63

13

0

13

8

All Budgets

49

26

58

10

15

14

72

31

Table 15. Use of the Internet or World Wide Web

Commodity Category

Make Provide Information Information Available to Network for Facilitate Researchers Members Activities and Others

Maintain a Home Page

Send and Receive E-mail

Other

Internet or WWW Not Used

(percent of organizations) * Grains and Oilseeds

22

22

22

11

44

0

56

Vegetables

0

11

22

0

33

0

56

Dairy

5

9

0

5

9

14

64


33

11

33

33

56

22

33

Fruits and Nuts

5

5

10

5

15

10

75


14

14

0

0

29

0

71


43

29

14

14

29

0

43

< 0.5

4

0

4

0

13

4

78

0.5 - 0.99

30

20

10

10

20

0

70

1.0 - 4.99

4

20

8

4

28

8

52

5.0 - 9.99

13

13

13

13

25

0

75

10.0 - 24.99

17

8

17

8

33

25

33

>= 25.0

60

20

60

60

60

20

40

All Budgets

13

12

12

8

25

8

60

Total Budget (Million $)

* 83 organizations responded to this question

32

Table 16. Budget Allocation of Promotion Organizations by Commodity Category Commodity Category Budget Item

Grains & Oilseeds

Vegetables

Dairy

M, P, S, & E *

Fruit & Fibers & State & Nuts Other Region

5.2 0.0 0.1

51.8 25.3 0.0

(Percent of Total Budget) 70.1 54.0 43.1 37.6 25.7 8.9 3.2 0.0 2.0

0.0

0.0

0.0

4.3

3.8

0.0

0.0

0.1 0.0 0.2 0.0 0.0 0.0

7.4 0.0 9.9 2.1 0.0 0.1

17.6 1.6 4.6 4.7 0.1 0.2

8.6 0.0 1.7 9.1 0.4 0.7

1.4 0.3 6.5 14.0 0.2 0.7

0.5 0.0 0.2 0.6 0.0 0.0

6.3 0.0 1.1 8.2 0.0 0.0

4.7

6.9

0.3

3.4

5.4

0.3

5.1

Export Promotion Consumer Advertising Technical Assistance Trade Servicing Unallocated Export Promotion

36.0 0.5 16.1 8.1 11.3

17.5 0.1 4.1 10.2 3.3

0.7 0.2 0.1 0.3 0.0

16.0 0.8 2.0 3.1 10.2

21.0 8.1 2.5 8.1 2.3

70.0 50.5 11.1 6.2 2.2

14.2 1.1 3.2 8.0 1.9

Nutrition Education Health Research Product Research Public Relations Program Evaluation Contributions to Other Organizations ** Program Administration Other Unallocated Expenditures

0.0 0.0 6.8 0.4 0.6

1.8 0.1 1.3 8.4 0.9

7.2 1.8 3.7 3.7 1.9

5.6 1.4 3.9 7.8 0.6

1.0 0.5 2.4 5.9 0.7

0.0 0.0 0.5 2.2 2.8

0.0 0.0 0.0 5.6 0.0

21.0

0.3

0.1

0.0

1.3

0.4

0.0

13.1 15.0 1.9

7.1 10.8 0.0

6.9 3.0 0.8

3.4 7.4 0.0

7.4 9.6 7.4

16.6 5.8 0.0

2.9 33.0 18.8

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Total Budget (Thousand $)

85,391

25,730

21,046

8,015

Domestic Promotion Television Advertising Radio Advertising Television & Radio Not Separated Print Advertising Outdoor Advertising Trade Advertising In-store Promotions Coupons Contests Unallocated Domestic Promotion

271,374 179,259 104,520

Note that due to rounding, percentages may not sum to100. * Meat, Poultry, Seafood, and Eggs ** Only includes contributions to non-surveyed organizations to avoid double counting.

33

1.7 0.1 0.1

25.4 1.1 3.7

Table 17. Budget Allocation of Promotion Organizations by Budget Size Total Budget (Million Dollars) Budget Item

= 25.0

All

59.0 28.5 0.5

50.6 23.6 1.6

Domestic Promotion Television Advertising Radio Advertising Television & Radio Not Separated Print Advertising Outdoor Advertising Trade Advertising In-store Promotions Coupons Contests Unallocated Domestic Promotion

30.2 5.5 5.2

19.8 4.4 2.3

(Percent of Total Budget) 25.6 50.8 44.1 6.2 26.3 20.3 4.3 2.8 2.3

0.0

0.0

0.0

0.0

6.2

0.0

1.7

1.7 1.3 2.0 5.1 0.0 0.9

2.1 0.1 2.3 3.6 0.0 1.7

2.1 0.7 0.8 3.5 0.2 0.5

2.7 1.4 6.3 11.1 0.3 0.0

2.1 0.7 1.1 6.3 0.0 0.2

16.3 0.5 5.0 6.4 0.2 0.5

9.7 0.7 3.6 6.5 0.1 0.4

8.5

3.3

7.3

0.0

4.9

1.1

2.7

Export Promotion Consumer Advertising Technical Assistance Trade Servicing Unallocated Export Promotion

5.5 0.4 0.8 4.4 0.0

11.4 2.8 0.9 2.8 4.9

18.1 5.5 2.9 6.7 3.0

14.1 2.0 2.9 9.3 0.0

29.3 4.5 8.8 5.7 10.4

7.0 2.1 1.0 1.3 2.6

14.9 3.1 3.4 3.8 4.6

Nutrition Education Health Research Product Research Public Relations Program Evaluation Contributions to Other Organizations *** Program Administration Other Unallocated Expenditures

10.7 2.6 3.4 12.7 0.4

6.7 0.0 5.6 8.1 0.4

14.5 1.0 3.6 5.6 1.4

5.4 0.8 1.1 4.5 0.4

2.7 0.4 0.2 1.8 0.5

3.1 1.6 5.8 6.0 1.6

4.5 1.1 3.7 4.8 1.2

3.7

9.9

4.9

2.4

0.4

5.1

2.8*

12.8 6.0 11.8

12.8 16.1 9.2

10.7 7.5 7.2

5.1 4.4 10.9

9.3 11.3 0.0

5.2 5.4 0.0

7.1 7.3 1.9

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Total Budget (Thousand $)

5,550

9,244

70,344

59,841

188,203 367,911 695,335**

Note that due to rounding, percentages may not sum to 100. * Only includes contributions to non-surveyed organizations to avoid double counting. ** Since some organizations contribute to toher organizations in differnet budget categories the total budget for all organizations is less than the sum of the total budgets over budget categories. *** May include contributions to organizations in other budget categories. 34

Table 18a. Average Percent of Budget Used for Program Evaluation by Commodity Category * Commodity Category Grains and Oilseeds

Vegetables

Dairy

0.2%

1.1%

1.3%

Meat, Poultry Fruits Seafood, and and Eggs Nuts (average percent **) 0.2%

0.9%



3.4%

0.0%

43%

0%


30%

42%

25%

31%

(number of organizations that provided itemized budgets) 8

10

26

12

26

7

5

* For organizations that provided itemized budgets ** Simple averages across organizations in the commodity category

Table 18b. Average Percent of Budget Used for Program Evaluation by Total Budget * Total Budget (Million Dollars) < 0.5

0.5- 0.99

1.00 - 4.99

5.00 - 9.99

10.00 - 24.99

>= 25.0

All Respondents

1.3%

1.0%

88%

32%

(average percent **) 0.8%

0.5%

1.8%

0.5%

0.5%


18%

35%

50%

39%

(number of organizations that provided itemized budgets) 25

11

29

8

* For organizations that provided itemized budgets ** Simple averages across organizations in the budget group

35

13

8

94